California Airport Uses Passenger Pledges to Woo New Airline

Kevin Valine, Modesto Bee

- Jun 03, 2014 4:53 pm

Skift Take

Airlines insist on revenue guarantees to start service in a new airport, but Modesto airport is trying to woo a new airline by having passengers make pledges. Nice try, Modesto, but it will be an uphill battle.

— Dennis Schaal

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When SkyWest Airlines flight UA5453 departs Modesto Airport on Wednesday afternoon, it will be the carrier’s last local flight and the first time in decades that the airport has not had commercial passenger service.

And the city’s effort to land another carrier is up in the air.

SkyWest is ending its three daily flights between Modesto and San Francisco International airports in 30-seat turboprop planes because of what it calls “poor performance in the market” and after several years of declining passenger numbers.

They say that is a better fit because Southern California is the top destination for passengers flying out of Modesto. The Los Angeles airport has fewer cancellations and more on-time flights than foggy San Francisco. Modesto travelers complain about missing connecting flights in San Francisco because of delays and cancellations.

Modesto and its consultant — Oregon-based Sixel Consulting Group — are using a novel approach to land the Los Angeles flights. Most carriers want a revenue guarantee when starting a new service, to ensure they don’t lose money in the initial years.

City officials have said Modesto cannot afford that. So Modesto and Sixel recently conducted a pledge drive in which they raised $1.5 million in pledges to persuade a major carrier to start the Los Angeles flights. The pledges are from travelers who say they would spend the amount they pledged on tickets.

The pledges are not binding but are meant to demonstrate the region’s commitment to the service. Modesto had to collect at least $1 million in pledges during the 10-week campaign.

Sixel officials have said the flights could start in 2015. But acting Airport Manager Steve Fischio said Friday that while the city, the consultant and carrier continue to work on the flights, the carrier does not have a timeline for when service could start. “They can’t tell us anything definitively,” he said. Officials have declined to name the carrier.

The last time Modesto Airport offered Los Angeles service was 2006-08, with SkyWest providing the flights in 30-seat turboprop planes. Modesto gave SkyWest a $550,000 revenue guarantee during the first year of service, with $495,000 of it coming from a federal grant. SkyWest cited rising fuel costs and a lack of profitability in its decision to end the flights. Previous Los Angeles flights were in 1992.

Pilot shortage

Modesto’s current effort is being hampered by a new Federal Aviation Administration rule this year that requires pilots to work shorter shifts and rest more. That means airlines need more pilots to provide the same level of service.

Greg Aktin, Sixel’s air service strategy and development consultant, said in an email that even though airlines knew the regulations were coming, the impact has been greater than expected and has created a pilot shortage. He said airlines are curtailing their expansion into new markets and in some cases shrinking operations.

Modesto and Sixel are talking to a second major airline about the Los Angeles flights. But that carrier has asked for a revenue guarantee, which could be a deal breaker. “We like the prospect of having this carrier coming into this community,” Fischio said. “But the cost may be too steep. We have to look at what makes economic sense.”

Fischio emphasized that the city has not given up trying to land another carrier and improving the airport. “It’s sad to see this air service leave our community,” he said. “But we are going to continue to make this the best municipal airport around.”

SkyWest’s departure will not have an immediate impact:

–The money Modesto receives from the SkyWest flights accounts for about 10 percent of the airport’s roughly $1 million in annual operating revenue. The city will continue to staff the airport with five employees.

–Fischio said he met with the managers at the airport’s two car rental companies and both said they don’t expect much to change because a lot of their business comes from outside the airport.

–Fischio said the city has talked with the FAA and that the agency has no plans to change its level of support. The FAA pays for the controllers who staff the airport tower and provides the airport with as much as $1 million annually for capital projects as long as the airport meets certain standards, such as having at least 10,000 passengers per year. “We know there is no immediate changes on the FAA side,” he said. “We just need to keep them informed.”

The airport can operate without a tower, Fischio said, but city officials want to keep the tower staffed. He said more than 100 general aviation aircraft are based at the airport.

There is strong interest in the Los Angeles flights, Fischio said. Since SkyWest announced in April that it was leaving, the airport has received daily phone calls from travelers regarding the flights. He said the number is growing, with the airport fielding about a half-dozen calls each day.

SkyWest flies between Modesto and San Francisco on behalf of United Express, a regional carrier for United Airlines. SkyWest has seen its passenger count at Modesto Airport nose-dive, from 22,985 in 2010 to 10,895 in 2013. It’s not likely United Airlines will bring in another carrier. A spokesman said in April: “We will evaluate the feasibility of future service if supported by a change in market conditions.”

Fischio said he believes it has been at least 20 years since Modesto has not had commercial passenger flights.

United Airlines started the first commercial air service at Modesto Airport in 1946. It continued to provide commercial service until March 1980, when deregulation of the industry prompted United to end its Modesto flights. Several regional airlines offering service aboard small, propeller-driven commuter planes came and went during the 1980s.

The commuter airline WestAir came to Modesto in the 1980s and stayed, eventually becoming United Express. SkyWest has provided the United Express flights since 1998.